Suppose a monopoly concrete contractor builds 20 driveways per month for $10,000 each. In order to increase sales to 21 driveways, the contractor must lower the price of driveways to $9,500. The marginal revenue of the 21st driveway is
A. $500.
B. -$500.
C. $9,500.
D. $199,500.
Answer: B
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A Nash equilibrium is an outcome where
A) both players are playing their best strategy, given the strategy chosen by the opponent. B) both players are playing their best strategy, regardless of the strategy chosen by the opponent. C) only one player can play his or her best strategy due to the strategy chosen by the opponent. D) neither player has a best strategy to play.
Consumer surplus exists when
A) it costs less to produce goods than buyers must pay for them. B) consumers value the good more highly than what they must pay to buy it. C) taxes on goods are less than the appropriate amount. D) the marginal benefit of the good is always equal to or less than the price of the good. E) the price of the good is greater than the marginal cost of producing a unit of the good.
Assume that both the demand curve and the supply curve for DVD players shift to the left but the supply curve shifts more than the demand curve. As a result,
A) both the equilibrium price and quantity of DVD players will decrease. B) the equilibrium price of DVD players will decrease; the equilibrium quantity may increase or decrease. C) the equilibrium price of DVD players may increase or decrease; the equilibrium quantity will increase. D) the equilibrium price of DVD players will increase; the equilibrium quantity will decrease.
Disposable income represents ________
A) the income received by firms, e.g. corporations B) an increase in GDP C) a decrease in GDP D) the after-tax income received by the household